Choosing the right college loan(s) will help students finance their education and avoid a bad experience when repayment becomes due. Failure to understand the rules and the options, on the other hand, can lead to unpleasant surprises and serious financial difficulties.
Student loans are separated into two categories; subsidized and unsubsidized. The chief difference between the categories is who is responsible for the interest during the time a student is actively enrolled in a college or university.
Subsidized loans are available to students who demonstrate, via the information they provide on the Free Financial Aid Form (FAFSA), substantial financial need. There is a finite limit on the amount of subsidized loan money students can borrow. However, the government pays the interest on such loans while students are enrolled in college, thus the term "subsidized".
Unsubsidized loans require no financial need; everyone is eligible to apply for them, and they are available in larger amounts than are subsidized loans. However, students are responsible for the interest payments, thus the term "unsubsidized"..
Almost always, college students who are eligible to receive unsubsidized loans need the full amount they are allowed to borrow. If they need more than that limit, they can take out unsubsidized loans as well.
Students can apply for the Perkins Loan or the Stafford Loan. Repayment of both begins six months after a student has graduated, stopped out, or dropped out. When there is good reason, lenders will frequently extend this six month grace period, although they are not obligated to do.
In addition, there is also the PLUS loan, which can be given to parents. The PLUS loan requires repayment to begin almost immediately, but interest is reasonable.
Even bankruptcy does not free students of the obligation to repay student loans. Lenders will virtually always work with people making a sincere effort to repay their loans, but those who attempt to evade their responsibilities and obligations are subject to wage garnishment and other serious penalties.
Loans are a great way for students to help finance their educational costs. In fact, for most people, they are the best investment they will ever make. But it is important to borrow no more than needed and to repay your loans on a timely basis. - 16492
Student loans are separated into two categories; subsidized and unsubsidized. The chief difference between the categories is who is responsible for the interest during the time a student is actively enrolled in a college or university.
Subsidized loans are available to students who demonstrate, via the information they provide on the Free Financial Aid Form (FAFSA), substantial financial need. There is a finite limit on the amount of subsidized loan money students can borrow. However, the government pays the interest on such loans while students are enrolled in college, thus the term "subsidized".
Unsubsidized loans require no financial need; everyone is eligible to apply for them, and they are available in larger amounts than are subsidized loans. However, students are responsible for the interest payments, thus the term "unsubsidized"..
Almost always, college students who are eligible to receive unsubsidized loans need the full amount they are allowed to borrow. If they need more than that limit, they can take out unsubsidized loans as well.
Students can apply for the Perkins Loan or the Stafford Loan. Repayment of both begins six months after a student has graduated, stopped out, or dropped out. When there is good reason, lenders will frequently extend this six month grace period, although they are not obligated to do.
In addition, there is also the PLUS loan, which can be given to parents. The PLUS loan requires repayment to begin almost immediately, but interest is reasonable.
Even bankruptcy does not free students of the obligation to repay student loans. Lenders will virtually always work with people making a sincere effort to repay their loans, but those who attempt to evade their responsibilities and obligations are subject to wage garnishment and other serious penalties.
Loans are a great way for students to help finance their educational costs. In fact, for most people, they are the best investment they will ever make. But it is important to borrow no more than needed and to repay your loans on a timely basis. - 16492
About the Author:
Janet Madden is the Director of Guidance at a large, urban high school. In addition to working with high school students, she advises adults in her school's evening programs on online colleges and accredited online degree programs.
